Instant gratification is lure of scratch-off

Games appeal to lower-income gamblers

Stephen "Sunny Big Guy" Bernath buys a fistful of instant lottery tickets every day and takes his place on a wooden bench next to a garbage can in front of the Krauszer's R&J Food Store in Perth Amboy.

There, the heavyset 70-year-old man rubs each ticket with a finger, cusses at it, then tosses it in the trash.

Rub, cuss, toss.

Rub, cuss, toss.

He has been known to do this for hours, filling the garbage can with his losers before going back into the store to try his luck again. Crossword. Betty Boop. Dominoes. In no time, there are 20, maybe 30 tickets in the trash.

"Look at this - not a winner among them," he says. "The biggest rip-off."

Yet he plays.

Instant tickets are to the lottery what slot machines are to casinos. Once overlooked as the lowliest lottery games, the $1, $2 and $5 scratch-offs with garish names like Shamrock Triple and Double Your Luck now are the driving force behind sales.

Last year, for the first time, instant ticket sales in New Jersey cracked the $1 billion mark, generating four times the revenue they did 10 years ago and representing 47 percent of the lottery's $2.3 billion in receipts.

Behind the explosive growth is an ever-changing deluge of games based on popular themes at several prices - not to mention a hefty ad budget.

As with other lottery games, scratch-off players are more likely to hail from lower-income neighborhoods, according to a Star-
Ledger analysis. Players who claimed large scratch-off jackpots between 2000 and 2004 were twice as likely to live in zip codes in the bottom quarter of the state's income ladder than in the top quarter, the analysis found.

Indeed, along with the Pick 3 and Pick 4 drawings, the analysis found, the instant scratch-offs are the most strongly regressive of the lottery's games, meaning the sales come disproportionately from lower-income neighborhoods.

"I don't think the affluent person ever . . . becomes a crazy gambler because of the instants," said Bill Thompson, professor of public administration at the University of Nevada/Las Vegas. "This is the poor people's slot machine."

Although lottery officials dispute it, demographic data contained in government documents obtained through the Open Public Records Act back up the trend: The income of instant game players skews to the $25,000-to-$49,000 range, while those who play the higher-stakes Mega Millions and Pick 6 drawings tend to be in higher income brackets. The average household income in New Jersey is just over $82,000.

Lottery documents also show instant players tend to be between 21 and 54 years old. The young "are not making a lot of money and they are looking for a quick thrill or escape," while the old "have had a hard life so far," according to a proposal from Brushfire Marketing Inc. of Whippany. Brushfire, which won an advertising contract from the state, used data from the lottery and its own research.

New Jersey Lottery Executive Director Michellene Davis denied instant games attract players in lower-income brackets. She said the flexibility of the games - players can buy them any time and don't have to wait for drawings - makes them alluring to all incomes.

"They seem to appeal to a broader base of people," she said.

OLD SCRATCH

The first instant game, 7-11-21, was unveiled in New Jersey in 1975, five years after the state created the lottery. Initially, only one scratch-off was offered at a time, with one or two introduced each year. Back then, there were no real themes or brands.

In 1996, the lottery changed its system for instants, giving players a constant, ever-changing stream of scratch-offs. That year, New Jersey offered 36 types of instant games. In fiscal year 2005, which ended July 1, there were 140.

In many states, instant games were "quite controversial" when introduced, as public officials feared they would hook people more easily than the traditional games, according to Eugene Christiansen, chairman of Christiansen Capital Advisors, a gambling consultant who has studied lotteries and has worked for the New Jersey Lottery.

"They were called paper slot machines," Christiansen said. "There was a lot of resistance on the part of the government and public to adding this product to lottery menus."

Today in New Jersey, more than 50 games are introduced each year, with seasonal themes for Christmas and Mother's Day and year-round favorites like Crossword and Big Money Spectacular. There are instants based on casino games like poker and roulette, on TV shows like "American Chopper" and the "Young and the Restless," and on computer games like Tetris and Slingo.

The prices also vary, ranging from $1 to $10 per scratch-off.

For each game, the number of winners is based on sales. But typically, one of four or five tickets will be a winner, with prizes ranging from a few dollars to $1 million.

Compared with other games of chance, the odds aren't good. Thompson, the University of Nevada professor, said slot machines pay out about 90 cents on the dollar, while instants return about 50 cents. (Overall in New Jersey, the state pays out about 55 cents for every lottery dollar it receives.)

Across the nation, instant games have become increasingly important to state lotteries as the industry has scrambled to boost sales in an age when jackpots for traditional drawings have to reach $300 million before anyone takes notice. Gone are the days when a $10 million jackpot caused a lottery-playing frenzy.

"The good performance of instant tickets in the last three years has been from a combination of improvements to the product," Christiansen said. "Instant games have become much more complicated and better marketed and better themed. They're a much more sophisticated product."

The trend represents a reversal for traditional lottery numbers' games, which leveled off or declined recently. Sales of the twice-
weekly Pick 6 in New Jersey have fallen 61 percent over seven years, ever since the multi-state Mega Millions was introduced with its bigger jackpots. Lotzee died in 2004 because sales were abysmal.

But the rapid expansion of instant games has more than made up for waning interest in some of the traditional drawings.

Last year, the lottery doubled the amount it spent to advertise instants, to $5 million. The increase, according to Christiansen, is "consistent with industry trends."

In its most recent marketing plan, Brushfire, the ad firm, said instant ticket sales respond well to advertising. To that end, the firm planned to advertise instants more regularly, focusing on the games' grand prizes, large number of winners and fun themes.

"The thrill of the instant tickets is scratching the latex off and feeling that there is a possibility of winning 'if I just match one more . . . ,'" the firm said in its bid. Brushfire also said because both the young and old play instants, it was "an opportunity to really zero in and target the consumers most likely to play (and get them to play more!)."

Officials at Brushfire did not respond to requests for an interview.

At the same time, the lottery is scrambling to develop more games.

The New Jersey Lottery was the first to introduce Internet-based games like Cyber Slingo and Tetris, appealing to younger players.

To date, Internet sales have totaled more than $15.1 million, said Davis, the lottery executive director. That's a drop in the bucket in a $2 billion-a-year business. "Cyber games would best be described as a test market," Davis said.

COMPULSIVE BEHAVIOR

Experts and players agree that what drives the demand for scratch-offs is instant gratification.

While a game like Pick 3 will bring players in twice a day to buy tickets before each drawing, the instants keep players coming back two, five, 10 times or more.

"The compulsive gamblers like (instants) a lot better than the traditional numbers," said Ed Looney, executive director of the Council on Compulsive Gambling of New Jersey. "There's quicker action, quicker results."

Walk into a liquor or convenience store and you'll see the scratch-off devotees - standing in corners, leaning over shelves, huddled by the coffee counters. Some stay for hours, rubbing tickets until their fingers turn black. Others sit in their cars, returning to buy more when they win.

Many lottery players said they've all but given up the old-style numbers games and now concentrate exclusively on scratch-offs.

John Dohanyos said he recently started buying instants by the "book" - a package of scratch-offs encased in plastic, just as they are sold to retailers. That a book sells for $300 a pop is no deterrent. The 51-year-old Middlesex County bus driver said he buys a book maybe three, four times a week, a habit he splits with his girlfriend.

Dohanyos said his odds of winning increase by buying in bulk. They don't. A book gets a player anywhere from 30 to 300 tickets, depending on a game's price. For $300, Dohanyos said his average win is between $140 and $170. Still, he's sticking to his new system.

"In all of New Jersey, where are the winners?" Dohanyos asks while waiting in line for more instants at the Krauszer's in Perth Amboy. "Are they still sitting in a warehouse in Trenton? They could be sitting in someone's drawer."

Dohanyos says he doesn't buy a book every day, but recently bought three over four days. He says he cut his play back lately to about $200 a day, on average.

"Everyone you talk to says they're a winner," he says.

"No one says they're a loser." _____________________________________________________________________________________________ Judy DeHaven and Robert Gebe loff may be reached at (973) 392-4141, or at jdehaven@starledger.com and rgebeloff@starledger.com.